Question 76 Return on equity (ROE) for Stylex Incorporated recently declined from 18% to 16.5%. Which of the following is the most likely explanation for the drop in Stylex’s ROE? A) An increase in leverage. B) An increase in total asset turnover. C) A decrease in revenues. D) An increase in the effective tax rate. Question 77 If new equity is issued to finance a capital project, flotation costs will be incurred. Which of the following most accurately describes the impact of flotation costs on the net present value (NPV) analysis of a project if flotation costs are treated correctly? Assuming a firm maintains its target capital structure, if flotation costs are treated correctly: A) the initial outlay will be higher than if no new equity were issued. B) the present value of the project’s cash inflows will be higher than if no new equity were issued. C) the weighted average cost of capital will be higher than if no new equity were issued. D) the component cost of equity in the weighted average cost of capital will be higher than if no new equity were issued.
Question 78 Which of the following firms is most likely to use a discounted cash flow technique as its primary capital budgeting tool? A) A large, publicly held European firm that has managers with no formal business education. B) A small, publicly held U.S. firm that has managers with no formal business education. C) A large, publicly held U.S. firm where managers that MBA degrees. D) A small, privately held European firm that has managers with no formal business education.
Question 79 Which of the following statements about the security market line (SML) is least accurate? A) The market portfolio consists of all risky assets. B) Securities that plot above the SML are undervalued. C) Securities that plot on the SML have no intrinsic value to the investor. D) The risk-free rate defines where the SML intersects the vertical axis.
Question 80 If the assumption of zero transactions costs which underlies the derivation of the Security Market Line (SML) is relaxed, the SML: A) is unique for every investor. B) is kinked rather than straight. C) cannot be derived unless a zero-beta portfolio exists. D) becomes a band rather than a line.
| 
发表于 2008-11-6 18:12
| 
